Quality Can Improve Profitability by Reducing Costs

question 139

Multiple Choice

Quality can improve profitability by reducing costs. Which of the following is not an aspect of reduced costs by quality improvements?

• A) flexible pricing
• B) increased productivity
• C) lower rework
• D) lower warranty costs
• E) lower scrap costs

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Definitions:

Net Operating Income

This refers to the profit realized from a business's operational activities, excluding taxes and interest.

Contribution Margin Ratio

A financial metric that measures the proportion of revenue that exceeds variable costs, indicating how much earnings can contribute towards fixed costs and profit.

Combined Margin

refers to the total margin generated by a product or entity after accounting for various types of costs, merging both gross and net margins to provide an overall profitability measure.

Fixed Expenses

Costs that do not change with the level of production or sales over a short period.